Duke Nukem Creators 3D Realms Sue Gearbox Over Unpaid Royalties

Apogee Software/3D Realms -- the studio that spent more than a decade working on Duke Nukem Forever -- is suing Gearbox Software, the company that bought that game’s rights and released the long-brewing sequel in 2011. Apogee/3D Realms alleges that Gearbox has refused to pay more than $US2 million owed to 3D Realms from royalties and advances Gearbox received from publishers for Duke Nukem Forever.

In a lawsuit was filed in Texas on June 7, 3D Realms insists that its agreement with Gearbox permits it to conduct an audit of Gearbox's royalty statements, which the studio has not allowed. 3D Realms is requesting a jury trial and says the following in the suit: “Gearbox is simply stonewalling here in an improper attempt to conceal information from 3D Realms that it is absolutely entitled to receive."

3D Realms and Apogee also allege that Gearbox has refused to pay the agreed-upon portion of revenue Gearbox received after Duke Nukem Forever was released. Gearbox, the suit says, "contends that this additional revenue is an advance from the publisher that was paid after the game was released" and therefore not subject to terms of the royalty agreement.

This suit is apparently the end result of a friendly deal gone wrong. From the filing:

"This was a deal among friends, because Gearbox's President, Randy Pitchford had long been friendly in the industry with Scott Miller and George Broussard, the principals of 3D Realms."

The filing mentions not only Duke Nukem Forever, but also a project called "Duke Begins" that was "already under development". Together these two titles were called "Future Duke Games", and that is what Gearbox acquired.

The suit also describes an email exchange in January 2010 in which Pitchford is said to agree to those terms.

"Even in the worst case, I am prepared to make sure that debt is repaid in exchange for the opportunity to drive the brand forward and generate profit through the development of the big ticket Duke Nukem video games for many years to come."

Gearbox has sent Kotaku a statement on the lawsuit, which begins by citing 3D Realms co-founder Scott Miller:

Ironically, Scott Miller himself provided the best response when he wrote: "...filed lawsuits are entirely one-sided statements, based on knee-deep BS and with more spin than a top."

The reality is that Apogee / 3D Realms (3DR) received the full benefit of its bargain. Gearbox, in its fulfillment of its commitments, enriched 3DR, saved 3DR from its debts and rescued 3DR from its litigation surrounding its failed dozen-plus year attempt to ship Duke Nukem Forever.

Everyone wished that 3DR's game was better received by the market for the benefit of gamers and profit to its creators. While 3DR might not wish the reality that the results make clear, 3DR turned out to be the only beneficiary of the deal. Gearbox Software, meanwhile, experienced damage to its credibility and loss of its money.

It's unfortunate that 3DR did not abide by the the objective audit rules outlined in the agreement and even more unfortunate that it chose to blame its failures on Gearbox. Since 3DR seems unable to accept reality and has chosen to become hostile, Gearbox is forced to bring its actual claims of breach of contract against 3DR and is confident Gearbox will prevail.

Perhaps the lesson learned here is to never enter a gaming business deal with a person who has had more lawsuits than shipped games.

The two companies had nothing but good things to say to each other when announcing the deal that gave Gearbox rights to the Duke Nukem franchise.

Here’s Gearbox CEO Randy Pitchford two years ago:

“The Gearbox Software team and I are ecstatic that we have grown to a position to be able to pick up and carry the torch and help Duke rise back to glory in his time of need."

And Scott Miller in a companion statement:

Gearbox was handpicked as the new home for Duke Nukem because of their continued passion, commitment and long-time heritage with the brand and 3D Realms

Kotaku has reached out to former members of 3D Realms -- which ceased to exist in 2009 -- for comment and will update this story if they respond.

Gearbox Software, meanwhile, experienced damage to its credibility and loss of its money.

Yep. 3D Realms should be bloody happy the game got out at all, from all reports, like GB said, it tanked and lost money, what do 3D Realms want? Money to appear out of nowhere? Had GB not intervened, they'd still be sitting on unfinished code proclaiming 'IT'LL BE OUT IN 2014!'

So.... Reading what's in this article:
Gearbox releases game.
Gearbox receives big pile of money.
Big pile of money shifted to different column on spreadsheet as an 'advance' rather than revenue subject to a royalty deal...

I'll be interested to see how this one plays out when the courts have all the information.

Obviously what we aren't seeing is the actual contracts. A think a big part of whether 3DR are owed anything hinges on whether the game was profitable for Gearbox at all. Reputational damage to Gearbox is not 3DR's problem. One would assume royalties owed to 3DR are a cut of profits over and above whatever Gearbox paid to acquire the rights to DNF in the first place. I wonder if Gearbox would have counted those licensing fees as a loss from the outset that had to be made up.

It seems like 3DR has a pretty good claim, but like the article says, the claim is one-sided bs with a heavy spin. All legal claims are.

"Perhaps the lesson learned here is to never enter a gaming business deal with a person who has had more lawsuits than shipped games."
Yeowch!

I'm not really too sure who to bat for here. It sounds like 3DR are in possibly in the right, according to the contract. But they're also sorta being dicks because this exact same thing happened to them before they shipped off the rights to Gearbox.

Though on the other hand, 3DR certainly wouldn't have made much at all from the sales of the game, so they're probably really needing any money Gearbox might have even possibly said they'd maybe supply.

To speculate If the deal was arranged on gross revenue vs net profit then yes Gearbox will need to pay 3DR some royalties which they apparently already have but not enough.... eh.... work it out boys and play nice ;)